Is it stupid to short the top % gainers of the day?

This trade was a little faster than usual.. But I just bought to cover at 11.10 for a fast 2% gain.

In fact I think I could have stayed in this one for a little longer and made more. Oh well.. I just wanted to trade it for an example.

Thanks for everyones input. I have a lot of new ideas brewing and new ways to fine tune my strategy.

Quote from koonsdawg:

I just shorted AGIX at 11.34..
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Daaaaammmnnn Dustin.. those were all good trades.

Quote from Dustin:

2/3 is pretty good. I only have around a 55% success rate but winners far outweigh losers. Usually I will trade 10-15 stocks a day, and 1-3 will be big winners. For example yesterday I caught ABFS, ANGO and WITS.

With this stuff the longer you do it the better you get so keep plugging away.
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Quote from koonsdawg:


One really good example of this that has happened recently is CPSL. It was on the top ten % gainers for the day and then the next day it dropped.
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I'm confused. Are you shorting them the next day, which the above statement is alluding to? Or are you shorting them the same day like your just completed trade on AGIX?

Please clarify.
 
ANNANDALE, Va. (MarketWatch) -- The top-performing portfolio in 2006, among the more than 500 that are recommended by the investment newsletters tracked by the Hulbert Financial Digest, gained 75.5%.
That's an impressive number, isn't it?
Compounded for 10 years, such a growth rate would turn $25,000 into nearly $7 million. Investors who were postponing retirement because their 401(k)s had been devastated by the bursting of the Internet bubble might be able to retire on time after all.
Don't for a minute think that you can consistently attain returns this large, however.
If the past is prologue, your $25,000 will not come close to $7 million over the next 10 years by following the previous year's top performer. On the contrary, such a strategy will shrink that $25,000 to just $1,526.
Consider the results of a hypothetical model portfolio that each year exactly mimicked the newsletter model portfolio that had the best return in the previous calendar year, according to the Hulbert Financial Digest. Over the past 16 years, this portfolio produced a 24.4% annualized loss.
That's 33 percentage points per year below what you could have achieved simply by buying and holding the stock market itself, as measured by the Dow Jones Wilshire 5000 index.

http://www.marketwatch.com/news/sto...x?guid={0C378670-FA48-4845-B3E4-BC6311B6CBF8}
 
Best reason this strategy might work is because everyone here seems to hate it.
"Copper the public's ideas and play at all times"- Robert Bacon
ST

Quote from koonsdawg:

Do you guys think it is stupid to short the top % gainers? I have found a little strategy that I think works very well. But I am not a seasoned trader and wanted to get your opinions. I have been shorting the top % gainers of the day. I figure what goes up that fast must come down. At least a little. So what I have been doing is shorting the stocks when I think they are at their peak. What usually happens is the stock will end up somewhere in the middle. What I mean by that is this. If a stock closed at $5 and then the next day jumps to $10 it will end up usaully around $7.5 give or take. Does anyone else do this?

One really good example of this that has happened recently is CPSL. It was on the top ten % gainers for the day and then the next day it dropped.

Any thoughts appreciated..
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Quote from Mvic:

I can't think of a strategy with worse odds than this one.
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I'm doing it every single day, and trust me, successfully.
of cource, it's not that simple "short every gainer", there is some additional criterias, but, again, I'm shorting top gainers every day and it's a perfect technique for me, best amond all techniques I ever used.
Alex
 
Thanks for making that point clear. I am not shorting "every" top gainer. I am very selective on which stocks I short everyday. Each one has a certain criteria it has to meet in order to be put on my watch list for the day.

Quote from shelupinin:

I'm doing it every single day, and trust me, successfully.
of cource, it's not that simple "short every gainer", there is some additional criterias, but, again, I'm shorting top gainers every day and it's a perfect technique for me, best amond all techniques I ever used.
Alex
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the main 2 rules I use:
1)the basic idea is to short stocks which gained too much on too low volume, I don't have exact digits, but trust me it matters, just check average daily volume and pre-market volume which caused that price spike, the more disbalance you have - the better i.e. high price spike on low volume compared to average daily volume
2) see charts and never enter the trade before you see weakness in chart, start to short stock which started to fall, usually it happens 10-20 minutes after pre-market open i.e. 8:10-8:20 a.m.

Quote from koonsdawg:

Thanks for making that point clear. I am not shorting "every" top gainer. I am very selective on which stocks I short everyday. Each one has a certain criteria it has to meet in order to be put on my watch list for the day.
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Quote from man:

the other way round you have small odds in your
favour. this way is half suicide. IMHO of course.
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why it's half suicide? I ALWAYS set stops immediately after entering the trade and never allocate more than 20% of my account into one stock... the suicide to trade that strategy with margin... but allocating maximum 20% and having stops is not a suicide... and, again, trust me, it works fine....
"It's not what you do, it's HOW you do it !!!"

Alex
 
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